Nipate
Forum => Kenya Discussion => Topic started by: Kadudu on May 28, 2019, 04:08:11 PM
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I thought Pundit told us everything is running smoothly like the SGR :D :D :D :D
For the first time in more than a decade, Kenya has reached out to the World Bank for an urgent loan in the form of budget support.
https://www.nation.co.ke/business/Broke-Kenya-seeks-Sh75bn-from-World-Bank/996-5134194-ync97f/index.html
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Rotich has been flipping debt like McDonald's buggers. Borrow here - pay there - Exim Bank - Eurobond - sijui gani tena. Debt has trippled while revenues have barely doubled. The trouble with poor investments like the SGR is the reality soon catches up. PR and spin can only take you so far.
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Rotich is not borrowing what was not budgeted. This kind of sensational nonsense doesn't happen if Rotich sells 100B of tbills every week. Gov has budgeted to borrow - and it's Rotich job to find out where to borrow. World Banks loans are nice...if they are willing to dish.
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Rotich is not borrowing what was not budgeted. This kind of sensational nonsense doesn't happen if Rotich sells 100B of tbills every week. Gov has budgeted to borrow - and it's Rotich job to find out where to borrow. World Banks loans are nice...if they are willing to dish.
These are burgerbonds not healthy borrowing. When you borrow to repay other debts - at higher interest.
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Everyone does debt rollover or refinancing. The US does it every day. China does it very often. The salient point is our budget and fiscal deficit is falling. We are not budgeting to borrow more. We are budgeted to borrow less. So we are borrowing less and less. We had gotten to nearly 8% fiscal deficit (amount you need to borrow) - and we are bringing that down to 3% by 2022...currently we are at around 5-6%.
These are burgerbonds not healthy borrowing. When you borrow to repay other debts - at higher interest.
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That's not a useful metric - cause it gives the impression only 5% of the budget goes to debt repayment. Which is misleading. Debt repayment vs revenue growth is what matters. CASHFLOW - a huge chunk of the 30B usd budget goes to repay debt abroad. Revenues have not kept pace with repayments and that's the bottomline.
From the same story - the bold line should shock you
“What we should be looking at is debt service-to-government revenues, and much less the GDP-to-debt ratio popular with our Treasury. We continue to justify the current situation where the Treasury prefers to use debt-to-GDP, hence arguing that we’re within the IMF benchmark sustainability ratios,” said an economist.
Kenya’s debt service-to-revenue ratio stands at 38 per cent, up from 17 per cent in 2012 and way above the global benchmark of 25 per cent. This means that, for every Sh100 in its pocket, Kenya is spending Sh38 for debt service, Sh45 on salaries and wages (including pensions) and Sh40 on recurrent expenditure. The country, therefore, is spending Sh123 for every Sh100 it collects in revenue.
Everyone does debt rollover or refinancing. The US does it every day. China does it very often. The salient point is our budget and fiscal deficit is falling. We are not budgeting to borrow more. We are budgeted to borrow less. So we are borrowing less and less. We had gotten to nearly 8% fiscal deficit (amount you need to borrow) - and we are bringing that down to 3% by 2022...currently we are at around 5-6%
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It will get better - because gov is collecting more taxes - and borrowing less. This not first time we are at 60% gdp to debt - and then we walk back to 40%. This is why we didn't take SGR loan. What I disagree is us stopping spending. In such times - we need to sell Safaricom and other cash cow - so we can continue with public investment in roads, rails, ports and such basic infrastructure.
That's not a useful metric - cause it gives the impression only 5% of the budget goes to debt repayment. Which is misleading. Debt repayment vs revenue growth is what matters. CASHFLOW - a huge chunk of the 30B usd budget goes to repay debt abroad. Revenues have not kept pace with repayments and that's the bottomline.
From the same story - the bold line should shock you
“What we should be looking at is debt service-to-government revenues, and much less the GDP-to-debt ratio popular with our Treasury. We continue to justify the current situation where the Treasury prefers to use debt-to-GDP, hence arguing that we’re within the IMF benchmark sustainability ratios,” said an economist.
Kenya’s debt service-to-revenue ratio stands at 38 per cent, up from 17 per cent in 2012 and way above the global benchmark of 25 per cent. This means that, for every Sh100 in its pocket, Kenya is spending Sh38 for debt service, Sh45 on salaries and wages (including pensions) and Sh40 on recurrent expenditure. The country, therefore, is spending Sh123 for every Sh100 it collects in revenue.
Everyone does debt rollover or refinancing. The US does it every day. China does it very often. The salient point is our budget and fiscal deficit is falling. We are not budgeting to borrow more. We are budgeted to borrow less. So we are borrowing less and less. We had gotten to nearly 8% fiscal deficit (amount you need to borrow) - and we are bringing that down to 3% by 2022...currently we are at around 5-6%
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Borrow & build is only good when you are at post-Moi rock-bottom like old Kibs. You have to be frugal and economical - cause debt has an EFFICIENCY factor - of diminishing marginal returns. Nairobi roads, rural murram, etc - great. Last-mile to illiterate peasants - bad. SGR to Naivasha & sijui wapi tena - very stupid idea.
Talk to Ruto about the Nairobi Metropolitan Subway - I could actually sing his tune. Hii ujinga ya rail to nowhere aachie Uhuru.
It will get better - because gov is collecting more taxes - and borrowing less. This not first time we are at 60% gdp to debt - and then we walk back to 40%. This is why we didn't take SGR loan. What I disagree is us stopping spending. In such times - we need to sell Safaricom and other cash cow - so we can continue with public investment in roads, rails, ports and such basic infrastructure.
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That's not a useful metric - cause it gives the impression only 5% of the budget goes to debt repayment. Which is misleading. Debt repayment vs revenue growth is what matters. CASHFLOW - a huge chunk of the 30B usd budget goes to repay debt abroad. Revenues have not kept pace with repayments and that's the bottomline.
From the same story - the bold line should shock you
“What we should be looking at is debt service-to-government revenues, and much less the GDP-to-debt ratio popular with our Treasury. We continue to justify the current situation where the Treasury prefers to use debt-to-GDP, hence arguing that we’re within the IMF benchmark sustainability ratios,” said an economist.
Kenya’s debt service-to-revenue ratio stands at 38 per cent, up from 17 per cent in 2012 and way above the global benchmark of 25 per cent. This means that, for every Sh100 in its pocket, Kenya is spending Sh38 for debt service, Sh45 on salaries and wages (including pensions) and Sh40 on recurrent expenditure. The country, therefore, is spending Sh123 for every Sh100 it collects in revenue.
Everyone does debt rollover or refinancing. The US does it every day. China does it very often. The salient point is our budget and fiscal deficit is falling. We are not budgeting to borrow more. We are budgeted to borrow less. So we are borrowing less and less. We had gotten to nearly 8% fiscal deficit (amount you need to borrow) - and we are bringing that down to 3% by 2022...currently we are at around 5-6%
kenya budget deficit was projected to be 6.3% if the kra met its collection estimates. But that's not happening, kra need to collect $5b in 2 months, that's impossible. So the actual budget deficit will be higher. Its increasingly clear that most sectors are struggling and "build and they will come" economics doesn't work. You have to address demand not build then look for demand.
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HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
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It seems you are one of the only optimists when it comes to the economy of Kenya. Just read what an economist unlike you has to say about the Kenyan economy at the moment.
Money is scarce, business slow and the wheels of commerce grinding slower and slower. The election and drought of 2017 was bad enough, but some say this year could be worse.
https://www.nation.co.ke/oped/opinion/Life-is-getting-tougher-every-day/440808-5135428-2sgn0a/index.html
HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
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I really don't care about anecdotal evidence from economist or columist. Yesterday CBK committe kept the base lending rate at 9% and were generally upbeat about the economy.
You can read their report here...macro-economics are look great.
Only downside risk - rainfall - but I think it's defied the weatherman.
It seems you are one of the only optimists when it comes to the economy of Kenya. Just read what an economist unlike you has to say about the Kenyan economy at the moment.
Money is scarce, business slow and the wheels of commerce grinding slower and slower. The election and drought of 2017 was bad enough, but some say this year could be worse.
https://www.nation.co.ke/oped/opinion/Life-is-getting-tougher-every-day/440808-5135428-2sgn0a/index.html
HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
It seems you are one of the only optimists when it comes to the economy of Kenya. Just read what an economist unlike you has to say about the Kenyan economy at the moment.
Money is scarce, business slow and the wheels of commerce grinding slower and slower. The election and drought of 2017 was bad enough, but some say this year could be worse.
https://www.nation.co.ke/oped/opinion/Life-is-getting-tougher-every-day/440808-5135428-2sgn0a/index.html
HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
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HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
That disbursements ‘problem’ is artificial, deliberate late disbursements ensures nothing gets done as we approach June. Explains why Governors are complaining. Watched #SideBar and Moses Kuria said they are not allocating nothing to NEW roads anymore because there is no money
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It mostly lacks of capacity to absorb the funds (most ministries and gov agencies engage in last-minute spending spree - with conference and all that) - and of course, our judiciary do not seem to understand that gov has a tight deadline of 1yr - so they drag cases. Treasury has always done a commendable job funding the budget - including borrowing and all that.
Obviously, post-2010 - there is even more pressure- counties must get their funding (they may be delayed but they must be disbursed) - the same with CDF - with all the school capitation - salaries, pensions and debt repayments - that leaves treasury with little wriggle room.
Anyway we have a serious absorption problem. Only the likes of CDF & now most Counties can spend the money budgeted for within that year.
And yes we also have problem with unpaid pending bills in most of these ministries - esp roads. Why do they start new projects before they settle old bills need to be dealt with.
That disbursements ‘problem’ is artificial, deliberate late disbursements ensures nothing gets done as we approach June. Explains why Governors are complaining. Watched #SideBar and Moses Kuria said they are not allocating nothing to NEW roads anymore because there is no money
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HK...we have absorption problem in most gov agencies ..thanks to procurement & judicial injuctions .and besides supplementary budget deal with those issues.We are borrowing less and Gdp is growing...and Kra are collecting more..just not meeting target.
If you have absorption problem why keep borrowing to have idle funds? btw government isn't borrowing less https://www.centralbank.go.ke/domestic-debt-intrument/ locally. The prudent thing is to consolidate funds then stop going to the market weekly. This would lower the interest rate and push banks to lend to private sector. This simple measure is what Mwiraria employed and lowered interest rate.
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We are of course borrow 'more" in cumulative terms but less in budget & gdp terms.
If you have absorption problem why keep borrowing to have idle funds? btw government isn't borrowing less https://www.centralbank.go.ke/domestic-debt-intrument/ locally. The prudent thing is to consolidate funds then stop going to the market weekly. This would lower the interest rate and push banks to lend to private sector. This simple measure is what Mwiraria employed and lowered interest rate.
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We are of course borrow 'more" in cumulative terms but less in budget & gdp terms.
If you have absorption problem why keep borrowing to have idle funds? btw government isn't borrowing less https://www.centralbank.go.ke/domestic-debt-intrument/ locally. The prudent thing is to consolidate funds then stop going to the market weekly. This would lower the interest rate and push banks to lend to private sector. This simple measure is what Mwiraria employed and lowered interest rate.
Actually in terms of borrowing we aren't borrowing less as a percentage of overall budget. There is always a projection for less borrowing predicated on kra collecting the projected amount. Kenya can rebase its economy to 100b but that wont pay debt, debts is paid by increasing revenue. That seems to have stagnated even after raising taxes last yr. This is what even uhuru economic adviser had to say https://mobile.nation.co.ke/lifestyle/Ex-Uhuru-adviser-says-debt-may-affect-growth-in-Kenya/1950774-4967482-3c152pz/index.html
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In short, Bwana RV Pundit, borrow & build - GoK-led growth - is fake growth. Because the tracks are still on the road. Because no FDI will be attracted by flashy expensive rail. Because noone with money is unable to get a house - folks are simply dirt-poor so they settle in the slums. Stop hogging capital with rails to nowhere and let the private sector - the best creator of jobs - do their thing. As the Ndii you so scorn says, superhighways and skyscrapers are not development. Development is mbeca - cash in people's pockets - while Jubilee has chocked SMEs and micros who do this.
VOODOO growth - slum dwellers trekking on the flashy SGR to tafuta kibarua.
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Under Jubilee GDP has doubled and so has tax & revenues. Kibaki I think left when he was collecting 750B per annum. Moi left when he was doing 180B. Jubilee are doing 1.6-1.8M now - they did 1.5 trillion last year. According to projections I have seen from treasury...Uhuru will leaves us 150B economy - with revenues at 30B dollars - and the budget will be nearly 50-60B then.
Actually in terms of borrowing we aren't borrowing less as a percentage of overall budget. There is always a projection for less borrowing predicated on kra collecting the projected amount. Kenya can rebase its economy to 100b but that wont pay debt, debts is paid by increasing revenue. That seems to have stagnated even after raising taxes last yr. This is what even uhuru economic adviser had to say https://mobile.nation.co.ke/lifestyle/Ex-Uhuru-adviser-says-debt-may-affect-growth-in-Kenya/1950774-4967482-3c152pz/index.html
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You've a problem with SGR - something the Brits had no problem building it 1900. SGR is needed for big ticket stuff - like manufacturing - and mining. Those have ability to bring real FDI and real GDP. 89% of Kenya is semi arid and arid - there is so much we can with above ground (agricluture on really small portion of land that is getting smaller n smaller) - we need to find what is underneath the dry land that is kenya. We have iron ore in Kenya but without the railway - it cheaper to import steel from China. Our cement is expensive compared to global markets...because to transport raw materials & finished goods needed....without a railway is damn expensive...cheaper cement because of cheaper clinker..will translate into huge multiplier in construction and real estate....etc etc
In short, Bwana RV Pundit, borrow & build - GoK-led growth - is fake growth. Because the tracks are still on the road. Because no FDI will be attracted by flashy expensive rail. Because noone with money is unable to get a house - folks are simply dirt-poor so they settle in the slums. Stop hogging capital with rails to nowhere and let the private sector - the best creator of jobs - do their thing. As the Ndii you so scorn says, superhighways and skyscrapers are not development. Development is mbeca - cash in people's pockets - while Jubilee has chocked SMEs and micros who do this.
VOODOO growth - slum dwellers trekking on the flashy SGR to tafuta kibarua.
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SGR is the sterling exemplar of poor choice. Gold medal caliber, I could switch gear to agric if you prefer. But on what do the imported steel or cement or iron ore transit? - same roads. On TOP of the highseas shipping cost. Nope, the lack of competitiveness has little to do with transit. Start by cutting down the unions - katiba manenos - tough luck. Tullow oil? any luck? On gasoline we are 100 years too late, the world is going green. We are just too incompetent you see.
You've a problem with SGR - something the Brits had no problem building it 1900. SGR is needed for big ticket stuff - like manufacturing - and mining. Those have ability to bring real FDI and real GDP. 89% of Kenya is semi arid and arid - there is so much we can with above ground (agricluture on really small portion of land that is getting smaller n smaller) - we need to find what is underneath the dry land that is kenya. We have iron ore in Kenya but without the railway - it cheaper to import steel from China. Our cement is expensive compared to global markets...because to transport raw materials & finished goods needed....without a railway is damn expensive...cheaper cement because of cheaper clinker..will translate into huge multiplier in construction and real estate....etc etc
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The roads are not good for bulk cargo. No serious mining or manufacturing will happen in the hinterland without good railway. Besides SGR is not really 'our' money but Chinese money until we repay it. China are not going to lend you 5B dollars to build roads. They will lend SGR as part of their belt and silk project - because they also need to move raw materials cheaply and fastly to china. The target obviously is DRC Congo with 24 trillion dollars worth of minerals.
The opportunity cost doesn't arise unless you can demonstrate that Kenya had 5B dollars to choose btw building a rail or something else.
And proper roads are also damn expensive...look at what American Betchel is proposing to do in Nairobi-Mombasa -3B dollars - the same cost for railway (3.8 or about with rolling stock).
https://www.businessdailyafrica.com/news/Sh300bn-Mombasa-mega-highway-to-bypass-Nairobi/539546-5058078-kv86am/index.html
SGR is the sterling exemplar of poor choice. Gold medal caliber, I could switch gear to agric if you prefer. But on what do the imported steel or cement or iron ore transit? - same roads. On TOP of the highseas shipping cost. Nope, the lack of competitiveness has little to do with transit. Start by cutting down the unions - katiba manenos - tough luck. Tullow oil? any luck? On gasoline we are 100 years too late, the world is going green. We are just too incompetent you see.